Icelandic officials said last week they had invited Fischer to live on the North Atlantic island, where he won a classic victory against Russian Boris Spassky in 1972. The idea has not found favor in the United States.

"We received a message from the U.S. government Friday suggesting that the Icelandic authorities withdraw the offer to Fischer," Illugi Gunnarsson, an aide to Foreign Minister David Oddsson, told Reuters.

He said the government had not yet responded.

The eccentric chess master is currently in Japan, where he was arrested last July for carrying an invalid U.S. passport.

Icelandic immigration officials said last week that as Reykjavik had an extradition agreement with Washington it would have no choice but to send Fischer back to the United States.

But Oddsson, quoted by newspaper Morgunbladid, suggested this was not the case as the statute of limitations had run out. "His actions are not illegal, at least not anymore," he said.

Fischer, 61, fell foul of the U.S. authorities by playing a match against Spassky in Yugoslavia in 1992, at a time when the country was the target of sanctions during Belgrade's war with breakaway republics.

He has spent the last few years moving around Eastern Europe and Asia to avoid deportation to the United States.

Reykjavik made its offer to Fischer after Icelandic chess fans persuaded him to write to their government requesting residency.